Pier A and its plaza.
BY TERESE LOEB KREUZER | Pier A headaches continue for the Battery Park City Authority. A plaza fronting the 19th-century pier at the southern end of Battery Park City will cost $5 million to complete. The B.P.C.A., which has rehabilitated the pier, is willing to spend the money. The mayor has to approve the expenditure and is also willing, but City Comptroller John Liu, who also has to agree, says no.
This standoff jeopardized the $300 million bond issue that the B.P.C.A. hopes to put in the capital markets in September. The Pier A plaza matter had to be settled or withdrawn from the funding package in order for the Comptroller’s Office to approve the bond issue.
The B.P.C.A. has chosen to temporarily resolve the matter by withdrawing the $5 million in question from its capital plan, leaving the Pier A plaza in limbo.
The rehabilitation of Pier A was originally funded with $30 million from the New York City Economic Development Corporation based on a prior tenant’s cost estimate from the 1990s. As construction delays continued, new structural problems were uncovered, and the cost rose, the Battery Park City Authority kicked in another $6 million. Then there was damage from Superstorm Sandy. The costs for that will probably be covered by insurance.
Liu’s office refused to approve the B.P.C.A.’s $95 million capital plan because it earmarked $5 million for the Pier A plaza. Liu said that E.D.C. should pay for the plaza, not the B.P.C.A.
In a July 30 letter to B.P.C.A. chairperson Dennis Mehiel, Liu wrote, “The Pier A Plaza funding troubles me because the New York City Economic Development Corporation (E.D.C.), B.P.C.A.’s partner in the Pier A redevelopment project, has refused to share in the plaza costs despite its historical responsibility for Pier A and its significant unrestricted fund balances. My office asked B.P.C.A. in May to request appropriate E.D.C. financial support. E.D.C. refused to consider B.P.C.A.’s request.”
Liu, a candidate for mayor, objected to having B.P.C.A. money go toward the plaza because excess revenue from the authority is supposed to be handed over to the city to help fund affordable housing.
As recently as the Aug. 20 B.P.C.A. board of directors meeting, Mehiel said that because of the “connective tissue between the capital plan and the debt offering…there’s certainly the possibility that we may withdraw our offering to the debt markets.”
Mehiel and Robert Serpico, the B.P.C.A.’s chief financial officer and interim president, said that putting off the debt offering would be costly. “Time is critical,” Serpico said at the board of directors meeting. “The market has been moving against us, so we could lose literally millions of dollars by delaying this offering.”
Serpico estimated that the authority could save approximately $50 million on the cost of capital by refinancing its debt.
Mehiel described the standoff as “a dispute among our two parents [Liu and Mayor Bloomberg]” about the $5 million.
“It would be unfortunate if the $50 million that would make it to housing were somehow sacrificed to the $5 million dispute,” he said.
On Aug. 21, Serpico and Phyllis Taylor, executive vice president and general counsel for the B.P.C.A., went before the Public Authorities Control Board in Albany to present the authority’s application to go into the bond market — a necessary step in that process. They also presented a capital plan for $90 million — minus the $5 million for the plaza. The Public Authorities Control Board approved the application. It now seems likely that Liu will also approve it.
However, the standoff between Liu and the E.D.C. on money for the plaza has not been resolved.
Ari Hoffnung, a Liu spokesperson, said in a phone interview that E.D.C. started the Pier A project and the E.D.C. should finish it.
He described the E.D.C. as “an organization sitting on millions and millions of dollars. They have the money to finance this project and finish it. Why not use the money to finish the project? Why take it away from an affordable housing fund?”
Liu has been critical of the E.D.C. for years. “We don’t believe that E.D.C. wisely invests in economic development,” said Hoffnung. “Comptroller Liu has done a tremendous amount of work in demonstrating that E.D.C. gives millions of dollars to companies in exchange for the companies agreeing to all sorts of things — usually in the area of jobs — that don’t ever materialize. We have found that they don’t hold corporations accountable for the commitments they make to New Yorkers. We have found that this entity doesn’t provide the city with funds that it is owed.”
The E.D.C. responded by saying, “We have not been a part of this project for quite some time. It is B.P.C.A.’s project and their responsibility, and we expect they will fund it and finish it.”
Meanwhile, work on the plaza had to begin more than a month ago in order to get it finished before cold, winter weather sets in.
